New Era with the New CEO and 5G... Winds of Change at KT

by Lee Minwoo

Published 19 Jan.2020 13:43(KST)

5G Overly Aggressive Competition Decreases... Operating Profit Up 8.8% Year-on-Year

Koo Hyun-mo, current President of KT Customer & Media Division, appointed as the next KT Chairman

[Asia Economy Reporter Minwoo Lee] As the aggressive competition in the early stages of 5G launch subsides, KT, which has appointed a new CEO, is expected to achieve better performance compared to the previous year.

According to DB Financial Investment on the 19th, KT's sales this year are projected to reach 25.3902 trillion KRW, with an operating profit of 1.2477 trillion KRW. This represents an increase of 4.5% in sales and 8.6% in operating profit compared to the previous year.

This is because from the first half of this year, a variety of 5G models will be released, broadening consumer choices, and it is analyzed that the aggressive competition seen during the initial 5G launch last year will not reoccur. Shin Eun-jung, a researcher at DB Financial Investment, stated, "The annual increase in marketing expenses this year is expected to be limited to 2.8%, and wireless revenue is estimated to grow by 8.8% compared to last year," adding, "With KT's next CEO recently appointed and the first personnel changes and organizational restructuring carried out, the previously chaotic and stagnant stock price is expected to have an opportunity to be reorganized according to the changing business structure."

In fact, KT is estimated to have posted somewhat below-expected results in the fourth quarter of last year. Marketing expenses increased by 16.8% year-on-year to 730.1 billion KRW, and the revenue recognition period was 20 months, the shortest among the three major telecom companies, resulting in the largest deferred revenue. Additionally, a 10 billion KRW content sourcing cost due to the increase in broadcasting retransmission fees (CPS) was reflected. The net increase in 5G subscribers is expected to be 370,000, about half of the 640,000 recorded in the third quarter.